Foreign Affairs: Global Role, Emerging Powers and New Markets

Lord Bilimoria Excerpts

Thursday 6th December 2012 Lords Chamber

[Lord Bilimoria]

My Lords, at the outset, I apologise to the noble Lord, Lord Howell, as I was not in the Chamber when he started this debate. It is such a pity that he is no longer a Minister because he did such a brilliant job at the Foreign and Commonwealth Office and it is the Government’s loss and ours that he is no longer there.

Just over six decades ago Britain had the largest empire the world has ever known. Today, that empire has gone and yet this tiny country of just 60 million people, making up not even 1% of the world’s population, is still one of the 10 largest economies in the world. It still sits at the top table of the world and still holds great influence. All this is despite the dramatic rise over the past three decades of countries such as China, and more recently India as an emerging global economic superpower. There, at the other extreme, we have two countries that together make up one-third of humanity.

Looking ahead, we will not be able to compete with these countries head on. We can only compete on our strengths, many of which are historic. We have amazing institutions in every field, whether it is in the City of London, cultural institutions such as the British Academy and the Royal Society of Arts or the traditions that are part of this nation’s fabric. There are the traditions of our Armed Forces expressed through the esprit de corps—which is amazing—and the traditions of the Royal Family, shown so marvellously in Her Majesty’s Diamond Jubilee this year, and in the traditions of this Parliament and in our very Chamber here, which is the only self-regulating Chamber in the world.

Then there are institutions such as Lloyd’s of London and our great universities, with Oxford and Cambridge being more than 800 years old. The noble Baroness, Lady Morris, spoke about our creative industries. Our design firms are the best. The designer of Apple, the most valuable company in the world, Sir Jonathan Ive, is British. Our law firms are the best of the best, as are our courts and, although only 7% of our children attend them, our private schools are the best in the world. The BBC for all its recent problems is, as the noble Lord, Lord Judd, said, a source of soft power, in particular the World Service.

The noble Lord, Lord Howell, spoke powerfully about the Commonwealth. It is such a huge asset and we are at the centre of it. There is even the possibility of a free trade zone within the Commonwealth, from the tiny islands at one extreme to a 1 billion population country such as India at the other. The Commonwealth has done so much with so little money. Just imagine how much more it could do if it had a proper budget. Can the Minister say that he will encourage this to happen?

The City of London is still the world’s leading financial centre. We still have a flexible and open economy that welcomes foreign investors such as the Tata Group. It is an economy where we will now have a Canadian as the governor of our central bank. Despite the awful cuts that have been made to our Armed Forces, where we temporarily lack aircraft carriers and the number of our troops has fallen to critically low figures, we still have one of the highest levels of defence spending in absolute terms in the world. We talk about soft power but soft power cannot exist without the hard power to back it up.

In tourism, we have one of the most attractive destinations in the world, with London being the greatest of the world’s great cities despite our awful weather, particularly this year. However, it dismays me when we talk about trade. As founding chairman of the UK-India Business Council, I regularly speak to business audiences around the country and I ask them how many of them do business with India. To this day, among hundreds of people, only a few hands go up.

I am delighted to hear that the Government have increased funding to UK Trade & Investment. We need constantly to encourage businesses to look abroad because the potential of emerging markets is phenomenal and we are just scratching the surface. However, while we talk about emerging markets, we must recognise that our principal international partner will be, and always has been, the United States. It always will be one of the most powerful nations in the world and we have stood side by side for more than a century, and that will not change.

Partnering with countries means working together not just on a business level but within our civil services, the Armed Forces carrying out exercises together, and in research and development. I chaired the Cambridge University India Partnership Advisory Board and we are working more closely with India. The UK-India Education and Research Initiative has been so successful, with hundreds of research interactions between the UK and India. We need to encourage this and to do a lot more of it. Importantly, to maintain our influence we must maintain our competitive edge. I do not think that we are investing anywhere near enough in research and development. We invest a fraction of a country such as the United States as a proportion of our GDP.

Most importantly, as a country, we must always be seen to be fair and just. Historically, as a nation, we have never followed the herd. We have always led our own way and done our own thing. Even in Europe, where we are, whatever anyone says, one of the most prominent members of the EU, we sensibly stayed out of the euro. Despite everything that is going on, we are still seen by many businesses around the world to be the gateway to Europe.

Again, importantly, our role in the world will be based on respect and trust. We have to continue to earn that respect among nations today. Despite all our economic woes, we need to be ahead of the game. We need to be best friends and partners to countries such as India, Indonesia, Brazil, South Africa and Turkey, quite apart from our longstanding partners such as the United States, which I have mentioned, Canada, Australia, New Zealand and Singapore. These emerging markets cannot switch on in an instant, or even in a few decades, the competitive edge that this country has built up, as well as its institutions, over the centuries.

As the noble Lord, Lord Alderdice, said, our foreign policy must be based on the confidence that we can maintain this competitive edge with integrity through mutual trust and respect. In that way, we will be able to bring mutual benefit and security to our economies as countries partner together. To conclude, our foreign policy, our global role and our global influence go hand in hand with our competitiveness. We cannot have one without the other.